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02 Dec 1010 Aid/Watch held to be a charitable institution despite political activity - Aid/Watch Incoroporated

The High Court (French CJ, Gummow, Hayne, Crennan and Bell JJ; Heydon and Kiefel JJ dissenting) has upheld the appeal of Aid/Watch Incorporated against the decision of the Full Federal Court (Kenny, Stone and Perram JJ), which had held that Aid/Watch Incorporated was not a charitable institution for the purposes of s 50-5 of ITAA 1997, s 123E of the FBT Assessment Act 1986 and s 176-1 of the GST Act 1999.

Aid/Watch does not deliver foreign aid but, instead, its objectives provide that it "monitors, researches, campaigns and undertakes activities" relating to aid and investment programs. The Full Federal Court held that because the immediate and prevailing aim of Aid/Watch was to influence Government and where necessary, change Government policy with a view to changing the laws applicable to foreign aid, this, as a matter of the law of charitable trusts, invalidated any claim to charitable status for the purposes of the federal revenue laws.

This finding by the Full Federal Court was rejected by the majority of the High Court. The majority said, at para 47:

"...the generation by lawful means of public debate, in the sense described earlier in these reasons, concerning the efficiency of foreign aid directed to the relief of poverty, itself is a purpose beneficial to the community within the fourth head in [Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531]."

It followed, on this basis, that Aid/Watch was a charitable institution, entitling it to the various exemptions from tax conferred by the three Acts.

Aid/Watch Incorporated v FCT [2010] HCA 42 (High Court; French CJ, Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; 1 December 2010).


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